Nigeria, nine others lost over $19bn in revenues to gas flare
Nigeria and nine other countries notorious for gas flaring lost over $19bn in revenues last year for failing to monetise their gas.
Nigeria, Algeria, Angola, Indonesia, Iran, Iraq, Libya, Russia, the US and Venezuela produce over 80 percent of all the flared gas globally.
According to Anna Belova, senior oil and gas analyst at GlobalData: “Gas flaring is not only a pollution issue, but also represents significant forgone revenues and economic loss. Ten countries flared over 9.5 billion cubic feet of gas per day (bcfd) in 2019, which exceeded Germany’s demand for natural gas that year. The value of gas flared by top ten countries exceeds US$9.5bn if priced at the US Henry Hub gas prices and adds to $19bn if priced at the UK National Petroleum Board (NPB) prices.”
Belova said lack of access to markets and small volumes of gas produced at individual sites typify the main reasons behind significant flaring volumes globally. Low domestic gas prices in the US, Russia, Iran, Nigeria and Algeria further exacerbate the situation.
In Nigeria, however, the federal government has approved the Nigerian Gas Flare Commercialisation Programme. The programme which was launched in 2016 will offer flare gas for sale by the government through a transparent and competitive bidding process.
A structure has been devised to provide project bankability for the buyers of flared gas.
The purpose of the gas flare commercialisation programme is to reduce the flaring and venting of associated methane gas.
The Department of Petroleum Resources (DPR) recently extended the Bid Submission Due Date (BSDD) of the Request for Proposal (REP) of the Nigeria Gas Flare Commercialisation Programme (NGFCP) by six weeks.
Paul Osu, Head, Public Affair at DPR, who made the announcement in a statement said the extension was sequel to the bidder’s conference which held on February 17, 2020 in respect to the NGFCP.
“Accordingly, the new submission due date shall be April 10. Consequently, qualified applicants should note that inputs, comments and observations on the draft Gas Sales Agreement (DSA) Milestone Development Agreement (MDA), Connection Agreement (CA) and Deliver or Pay Agreement (DoPA) posted on the portal were expected on or before March 5.
“Furthermore, the DPR shall provide relevant updates for data prying and leasing in the data room as necessary within the next one week,” he said.
Osu said that in a bid to further incentivise the programme, the minimum floor price for flared gas would be $0.25 per million standard cubic feet (mscf) for land sites; swamp and shallow offshore sites would be $0.15/mscf, while the minimum floor price for deep offshore would be $0.10 /mscf.